Canada’s rental market is giving prospective tenants something that was almost unthinkable during the post-pandemic housing crunch: sustained price declines. Average asking rents slipped again compared with a year earlier in July, extending a downturn that has now lasted nearly two years. Condominium rentals are taking an even bigger hit, falling 6.3% annually as landlords compete for tenants in a market with more available supply and weaker demand.
The decline does not mean renting has suddenly become inexpensive. Asking rents remain above $2,000 nationally, affordability remains a major concern, and lower-priced units are still difficult to find in many cities. But the balance of power has clearly shifted from the frantic rental conditions seen only a few years ago.
Canada’s Rental Decline Has Reached 22 Consecutive Months
The average asking rent across all residential property types in Canada was $2,037 in July, 4.0% lower than a year earlier. That made July the 22nd consecutive month in which national asking rents declined on a year-over-year basis. Compared with two years earlier, rents were down 7.5%, taking the national average back to its lowest July level since 2022.
The direction of the market becomes more interesting when monthly numbers are considered. Average asking rent actually edged 0.2% higher from June, marking the fourth consecutive monthly increase since rents reached a 35-month low in March. Summer is normally one of the busiest leasing periods of the year, however, and the latest increase was relatively subdued. The result is a rental market that is still cheaper than last year but no longer falling as quickly as it was earlier in 2026.
Condo Landlords Are Taking a Much Bigger Hit
Condominium apartments have become one of the clearest examples of Canada’s rental-market reversal. Average condo asking rent fell 6.3% year over year in July to $2,063. That decline was considerably larger than the 2.6% decrease recorded for purpose-built rental apartments, suggesting investor-owned condos are facing particularly intense competition for tenants.
There is an important short-term wrinkle. Condo asking rents increased 0.3% between June and July, which suggests the market may be approaching a floor rather than continuing to fall at the same pace indefinitely. Still, the annual decline is significant. An investor who purchased a unit expecting steadily rising rents is now operating in a very different environment. Leaving a privately owned condo vacant can quickly become expensive, which gives individual landlords a strong incentive to adjust pricing when comparable units are sitting on the market.
Studio and One-Bedroom Condos Are Falling Fastest
Smaller condos have experienced some of the most dramatic rental declines. Studio condo asking rents fell 9.6% year over year in July to an average of $1,594. One-bedroom condo rents were close behind, dropping 7.8%. That puts the greatest downward pressure on the portion of the condo market traditionally associated with singles, students, young professionals and investors buying smaller units.
Larger rentals have proven more resilient. Across all property types nationally, three-bedroom asking rents fell just 2.1% to $2,515, while two-bedroom rents declined 2.7% to $2,159. Studios fell 4.1% and one-bedrooms declined 3.9%. The contrast suggests rental conditions are not weakening equally across every household type. Someone searching for a small downtown condo may encounter noticeably better pricing than a year ago, while a family searching for a three-bedroom home may find far less relief.
Purpose-Built Rentals Are Holding Up Better
Purpose-built rental apartments are proving considerably more resilient than investor-owned condos. Average asking rents in that category were $2,041 in July, down 2.6% from a year earlier. Three-bedroom purpose-built rents were essentially unchanged annually at $2,743, even as studios fell 3.9% and one-bedroom units declined 3.0%.
At the other end of the market, secondary rentals such as houses and townhouses recorded an even steeper decline than condos. Their average asking rent fell 7.5% year over year to $2,007. The difference highlights how ownership structure can affect pricing behaviour. Large apartment operators can spread vacancies across hundreds of units, while someone renting out one condo or house may feel financial pressure much sooner when it sits empty. That does not guarantee discounts in every neighbourhood, but it helps explain why privately supplied rental categories have adjusted more aggressively.
A Wave of New Supply Is Giving Renters More Choice
Canada spent years struggling to build rental housing quickly enough to match demand. The picture has started to change. CMHC reported that rental apartment completions in early 2026 were running above the same period in 2025, while vacancy was particularly elevated in buildings completed after 2020. Newly constructed units are also taking longer to lease in some markets.
Competition is not coming only from purpose-built apartments. CMHC says investor-owned condominium apartments are adding unusually strong competition in large markets, particularly where recently completed condos have entered the rental pool. Some landlords have responded by cutting asking rents; others are using incentives such as discounted parking, move-in credits, gift cards or periods of free rent. For renters accustomed to bidding wars and limited choice, the return of landlord incentives represents one of the clearest signs that market conditions have become more balanced.
Slower Population Growth Is Changing the Demand Equation
Housing supply is only half of the equation. Canada is also experiencing a major shift in population growth. Preliminary Statistics Canada estimates showed the country’s population fell by approximately 55,000 people during the first quarter of 2026, leaving the population at roughly 41.4 million on April 1. The estimated number of non-permanent residents dropped 4.4% during the quarter to about 2.56 million.
Ontario, the country’s largest rental market, experienced particularly notable changes. Its population declined by roughly 32,600 during the first quarter, while the estimated number of non-permanent residents fell 4.4%. Population changes should not be treated as the sole explanation for falling rents—new construction, local employment conditions, affordability and household formation also matter. But fewer additional renters competing for new listings removes some of the demand pressure that helped produce the extraordinary rent increases of the early 2020s.
Toronto Is Starting to Break Away From the Downturn
Toronto may be offering an early glimpse of what a rental-market bottom looks like. Apartment and condo asking rents in the city increased 1.6% from June to $2,577 in July. They were down only 0.6% from a year earlier, making Toronto the best-performing rental market among Canada’s six largest cities on an annual basis. Three-bedroom Toronto rents actually increased 3.9% year over year to $3,655.
Supply may be playing a role in the turnaround. Rentals.ca and Urbanation reported that Toronto rental listings were roughly 6% lower than a year earlier. Yet the improvement has not spread evenly throughout the Greater Toronto Area. Brampton, Mississauga, Oakville and Oshawa were still recording annual declines of more than 7% across property types. The contrast shows why the national average can hide major differences even between communities separated by relatively short drives.
The Provincial Divide Is Getting Bigger
Canada increasingly looks like a collection of very different rental markets. Apartment and condo asking rents fell 4.3% annually in Alberta, 4.1% in British Columbia and 3.7% in Ontario in July. Ontario nevertheless recorded a 0.8% monthly increase, its third consecutive monthly gain after reaching a 46-month low in April, another indication that some previously weak markets may be stabilizing.
Nova Scotia continues to move in the opposite direction. Its apartment and condo asking rent averaged $2,377, up 4.5% year over year and 0.7% from June. That kept it ahead of British Columbia for a third consecutive month, although the comparison requires context: Nova Scotia’s average is boosted by a high concentration of recently completed, higher-priced rental projects and a larger share of two- and three-bedroom listings. Over three years, Ontario rents were down 7.9% and B.C. rents 10.1%, while Saskatchewan remained 25.7% higher.
Falling Asking Rents Do Not Mean Renting Is Suddenly Affordable
A national rent decline sounds encouraging, but the experience of many renters remains difficult. A Rentals.ca renter study conducted in the spring found that 70% of respondents identified high prices as the biggest challenge in their housing search. In a regional analysis of 1,194 renters, high rents ranked as the leading problem in every major market studied.
CMHC data provides another reason for caution. Greater vacancy and renter mobility are concentrated disproportionately in newer and more expensive units, while vacancy remains low in many of the cheapest rental segments. That means someone shopping for a relatively expensive new apartment may suddenly have multiple buildings competing for their business, while someone seeking the lowest-cost unit in the same city can still face limited options. CMHC also distinguishes between asking rent on available units and average rent paid by existing tenants—the two measures can move differently because existing leases adjust more gradually.
Renters Are Also Getting Less Space for Their Money
The headline decline in monthly rent does not tell the entire affordability story. Across Canada’s six largest rental markets, average asking rent per square foot was $2.54 in July, unchanged from a year earlier. It was only 3.6% below July 2024, when the figure stood at $2.63 per square foot.
At the same time, the average size of an available rental unit fell to 831 square feet, down 3.0% from a year earlier. Compared with two years ago, average available unit size had shrunk 5.5%, from 879 square feet. In practical terms, part of the improvement seen in headline rents is accompanied by tenants shopping among smaller homes. A renter may find that a monthly asking price has dropped, yet still discover that the apartment offering that lower price has less living space than comparable listings available during the peak of the market.
The Market May Be Stabilizing—But It Has Not Fully Turned
July’s numbers point in two directions at once. Annual rents are still clearly falling: national asking rents are down 4.0%, condo rents are down 6.3%, and declines have persisted for 22 consecutive months. Yet monthly asking rents have now risen for four months in a row, Toronto is showing stronger momentum and the annual rate of decline is becoming smaller. Those signals suggest the downturn may be entering a more stable phase.
CMHC expects renter household formation to continue even with weaker population growth, supported partly by younger Canadians forming households and by improving affordability allowing some previously constrained renters to move. That could gradually absorb excess supply. For now, however, the market remains noticeably friendlier to prospective tenants than it was during the rental surge of 2022 through 2024. The next several months will show whether Canada has reached a durable floor—or merely another pause in a longer adjustment.
